Keeping New CEOs Happy a Challenge for CFOs

Three out of four finance chiefs survive a new chief executive’s first year in office, but that doesn’t mean their jobs are completely safe.

As CFO Journal wrote in Tuesday’s Marketplace section of The Wall Street Journal, nearly 25% of CFOs leave their posts within 12 months of getting a new boss. But that number climbs to above 33% two years out and rises to 42% by the end of year three, according to Korn/Ferry International’s financial officer practice.

Since the average tenure among CFOs in the 1,000 largest companies Korn/Ferry tracks was under six years in 2012, it becomes more difficult as time goes by to separate retirement and natural attrition from personality clashes and regime change.

But some CFOs lose their jobs after the CEO has been in charge for a while – and the CEO decides to replace them. That’s what happened this summer at Motorola Solutions Inc., a provider of public-safety radios, handheld scanners and telecommunications network gear based in Schaumburg, Ill.

In mid-August, the company said CFO Ed Fitzpatrick was leaving the company after 15 years, more than four years in the post. It named a longtime financial executive as his successor on an interim basis and said it hopes to fill the position permanently by the end of the year.

The announcement came soon after the company had twice scaled back its full-year revenue outlook.

Motorola Solutions CEO Greg Brown co-led Motorola Inc. before its spin-off of Motorola Mobility in 2011. “The decision for the CFO change was mine,” Mr. Brown said in an interview. “I thought it was appropriate to get a new perspective.”

“Clearly we had some financial forecasting challenges,” he said.

Sometimes, surviving a new CEO means going with the flow.

Lamar Chesney, a veteran finance and procurement executive who is now a business strategy advisor, once had four CEOs in a roughly 13-year span while running the finance department for a health-care management company. While the CFO’s job “is to add stability during a period of ambiguity,” he says it is important not to be seen as an impediment to the new boss’s strategy.

He remembers once allowing his boss to pursue a strategy that Mr. Chesney says had already been unsuccessfully tried in the past. When the CEO later asked why Mr. Chesney hadn’t offered up that information, Mr. Chesney says he replied that just because it had failed before didn’t mean it couldn’t succeed, and rhetorically asked the CEO, “What if I had kept telling you this won’t work.”

Mr. Chesney also recalls being CFO of an acquirer during a transformative merger where most of the target’s executives remained to lead the combined company.

“I was one of the few that survived,” he says.

He said he promptly called an “all-hands meeting” of his finance staff, to let them know “the board wants a change in leadership.”

Mr. Chesney remembers instructing his employees to look in the mirror and practice four words until they came naturally.

Nearly across the board, mid-market executives are hiring new employees, buying new technology solutions, acquiring businesses to reach new markets and preparing IPOs, according to a Deloitte survey of more than 500 mid-market executives. But companies are running up against a number of constraints as they seek to expand, particularly in acquiring and retaining skilled talent.